The Business Cycle and Canadian GDP growth
The Business Cycle and Canadian GDP growth
The Business Cycle and Canadian GDP growth
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<strong>The</strong> <strong>Business</strong> <strong>Cycle</strong><br />
Mr. Raposo<br />
CIA 4U1<br />
Copyright © 2009 Brian Raposo
<strong>The</strong> <strong>Business</strong> <strong>Cycle</strong><br />
• Refers to the general “ups <strong>and</strong> downs” in<br />
economic activity over a period of time<br />
• Typically characterized by 4 phases<br />
Copyright © 2009 Brian Raposo
Recovery<br />
Peak<br />
<strong>The</strong> <strong>Business</strong> <strong>Cycle</strong><br />
Peak<br />
Trough<br />
Trough<br />
Recession Recession<br />
Recession Recession<br />
Recovery<br />
Time<br />
Copyright © 2009 Brian Raposo<br />
<strong>Business</strong> Level of Activity
4 Phases of the <strong>Business</strong> <strong>Cycle</strong><br />
1. Peak<br />
2. Recession<br />
3. Trough<br />
4. Recovery<br />
Copyright © 2009 Brian Raposo
1. Peaks<br />
• peak: the point in the business cycle at<br />
which real output is at its highest<br />
• Real output is measured as <strong>GDP</strong> (gross<br />
domestic product)<br />
Copyright © 2009 Brian Raposo
2. Recessions<br />
• recession: a decline in real output that<br />
lasts for six months or more (2 quarters)<br />
• recessionary gap: the amount by which<br />
equilibrium output falls short of potential<br />
output<br />
Copyright © 2009 Brian Raposo
3. Troughs<br />
• trough: the point in the business cycle at<br />
which real output is at its lowest<br />
Copyright © 2009 Brian Raposo
4. Recovery<br />
• Also known as a period of expansion in<br />
which a sustained rise in real output of an<br />
economy occurs<br />
Copyright © 2009 Brian Raposo
<strong>Canadian</strong> Recessions<br />
• Look at the following table<br />
• Can you identify the business cycle given<br />
the following data?<br />
• What predictions can you make about the<br />
<strong>Canadian</strong> economy in the short-run?<br />
run?<br />
• What predictions can you make about the<br />
<strong>Canadian</strong> economy in the short-run?<br />
run?<br />
Copyright © 2009 Brian Raposo
Copyright © 2009 Brian Raposo<br />
Source: Canada’s Economic Action Plan, Government of Canada 2009
Source: Canada’s Economic Action Plan, Government of Canada 2009<br />
Copyright © 2009 Brian Raposo
Source: Canada’s<br />
Economic Action<br />
Plan, Government of<br />
Canada 2009<br />
Copyright © 2009 Brian Raposo
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